Bay Area housing subsidies suffer from sequestration

Richard Cherniglia, Joe Torrisi, Verna Hayden and Linda Harrelson enjoy a weekly potluck brunch at the Sunset Gardens housing complex in Gilroy on April 2, 2013. Cherniglia is a maintenance worker there, and the others are residents. The Sunset Gardens is managed by the Santa Clara Housing Authority. The looming deep budget cuts from the sequester deadlock in Washington D.C. could threaten the Santa Clara Housing Authority rental subsidy program, which keeps thousands of seniors like these residents from becoming homeless. (Gary Reyes/Staff)

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Verna Hayden, 81, enjoys a potluck brunch at Sunset Gardens in Gilroy on April 2, 2013. Hayden lives in the Sunset Gardens, which is managed by the Santa Clara Housing Authority. The looming deep budget cuts from the sequester deadlock in Washington D.C. could threaten the Santa Clara Housing Authority rental subsidy program, which keeps thousands of seniors like Hayden from becoming homeless.

Verna Hayden is 81 years old, lives on a fixed income and now finds herself an unlikely face of the "sequestration" drama emanating from Washington, D.C. Hayden would love for "those politicians" to see how frugally she lives so they could understand why the federal budget cuts to housing assistance have people like her so panicked.

"They should be in our shoes for just one week to see how we're doing our best to make ends meet and how losing even a little bit will hurt someone like me," said Hayden, who lives in a Gilroy retirement complex. "There's a human reality to what's happening. We're not just numbers."

Hayden is one of the thousands throughout the Bay Area who receives rental subsidies from the government's Section 8 voucher program. But local housing authorities are grappling with millions in sequester-forced cuts -- which means less help available for low-income families, seniors and people with disabilities.

The Santa Clara County Housing Authority, for instance, has lost $21 million in funding and desperately is searching for ways to avoid the worst-case scenario -- pulling vouchers from some of the 17,000 households it serves. That would be devastating with the sky-high cost of Bay Area rental housing, said Executive Director Alex Sanchez.

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"We're being put in an untenable position of having to decide winners and losers among the most vulnerable," Sanchez added. "We're forced to pit one group of poor people against another group. Seniors versus the disabled. Homeless versus working-poor families. It's an impossible choice with terrible consequences."

As the sequester has begun to hit home, Alicia Diaz is holding her breath to learn if she and her two young children will be part of the collateral damage.

"If I get cut from the program, I don't know what I would do," said Diaz, 46, a secretary at the Milpitas Unified School District. "I probably would be homeless. I don't understand why they're cutting something that helps working people like me. It's just so unnecessary."

While housing authorities in Oakland, Alameda County and San Mateo County believe they can avoid eliminating vouchers in the short term, there is a cost. Those agencies, like others across the country, are freezing their current waiting lists. So as vouchers become available, they won't be reissued to other families who often have spent years hoping to get one.

"If this is the new normal, then we're going to be serving 800 to 900 fewer families a year," said Eric Johnson, executive director of the Oakland Housing Authority, which is facing $11 million in sequester cuts. "The safety net just got some big holes in it, and you're going to see this gradual erosion where people become more and more desperate."

Sequestration was intended to be a sort of poison pill -- $85 billion in automatic, across-the-board cuts in discretionary federal spending so unpalatable to both Democrats and Republicans that they would be forced into negotiating a "grand bargain" budget agreement. But even that didn't break the ongoing political deadlock, and the ax fell when the March 1 deadline passed, leading to deep cuts in military spending and furloughs for federal workers.

The ripple effect also has begun to rock the rent-subsidy program, which has received bipartisan support as it assists low-income households. Seniors and the disabled make up about half of the 2.2 million households nationally that received assistance.

Recipients typically pay about 30 percent of their income in rent, and the voucher makes up the difference. That can be a godsend for the poor in the high-cost Bay Area.

"The rental market just doesn't work for these people because they are so far below the poverty level," said Sunia Zaterman, executive director of the Council of Large Public Housing Authorities. "That's why for low-income families this is just a disaster, and it's tremendously unfair."

Housing and Urban Development Secretary Shaun Donovan told Congress in February that about 125,000 households nationally could lose their rental subsidies and would be at risk of becoming homeless because of the sequester. In California, there are about 350,000 families in the program. When you take into account the 6 percent cuts, potentially 21,000 households could be affected statewide, said Bill Lowery, the San Mateo County Housing Authority executive director.

This situation has become dire in places like San Francisco and Santa Clara County, in large part because of the extreme cost of housing.

The San Francisco Housing Authority, which like other agencies already was hamstrung by previous budget cuts, is expecting a $6.2 million operating loss by the end of the fiscal year in September.

Sanchez said expensive housing in Santa Clara County, the large number of households served and virtually no turnover in vouchers combine to limit the agency's ability to find savings.

It's difficult to persuade landlords to take any less money when, in a tight rental market, "there are three, four, five private renters who can pay more waiting right behind the Section 8 people," Sanchez said. And voucher recipients say they would be hard-pressed to pay any more.

"I couldn't pay 40 percent of my income," said Amy Samelson, 55, of San Jose, who lives on $866 a month from Social Security disability. "I don't know how I would eat."

Housing officials will present a course of action at an April 23 meeting. But while Sanchez said the last thing they will consider is cutting off people from the program, he added: "It's basic math, and the money is just not there."

Unless there's a compromise in Washington, the problem only will worsen. That's because the sequester cuts would continue over a 10-year period.

Hayden considers herself "lucky" to get $1,100 a month from Social Security and a small retirement account. But she has no idea what will happen if she loses even part of her rental assistance.

"I know there are people who believe we don't deserve the help we get," Hayden said. "But we're not receiving some free stuff. I worked my whole life. I've made things stretch. But now I'm worried what's going to happen next."